DHAKA (Reuters) - Bangladesh, one of the world's poorest and most crowded nations, plans to go ahead with work to develop an isolated, flood-prone island in the Bay of Bengal to temporarily house tens of thousands of Rohingya Muslims fleeing violence in neighbouring Myanmar, officials say.

Dhaka says the Rohingya are not welcome, and has told border guards to push back those trying to enter the country illegally. But close to 125,000 Rohingya have crossed into Bangladesh in just 10 days, joining more than 400,000 others already living there in cramped makeshift camps.

"We are stopping them wherever we can, but there are areas where we can't stop them because of the nature of the border; forests, hills," said H.T. Imam, Prime Minister Sheikh Hasina's political adviser.

"We have requested international agencies for help for shifting the Rohingya temporarily into a place where they can live - an island called Thengar Char. Developing Thengar Char should be given serious consideration," he said.

Leonard Doyle, chief spokesman for the International Organisation for Migration, said the idea of moving refugees to the island has been talked about for years, but he hadn’t heard anything new in the past few days.

The island, which only emerged from the silt off Bangladesh's delta coast 11 years ago, is two hours by boat from the nearest settlement. It regularly floods during June-September monsoons and, when seas are calm, pirates roam the nearby waters to kidnap fishermen for ransom.

Flat and featureless, Thengar Char has no roads or buildings. When Reuters visited in February, a few buffalo grazing along its shores were the only sign of life.

The plan to develop the island and use it to house refugees was criticised by humanitarian workers when it was proposed in 2015 and revived last year. Bangladesh, though, insists it alone has the right to decide where to shelter the growing numbers of refugees.

"The honourable prime minister wants to resettle them in Thengar Char, though some people say that island will not be a suitable place for them," said another Hasina aide, who declined to be named. "But there are many such areas in Bangladesh, where Bangladeshis live. It's our country, and we decide."

Officials say no one could have foreseen just how many refugees would arrive so swiftly after violence in northern Myanmar last year sent more than 75,000 Rohingya fleeing across the border.

The latest unrest in Myanmar's northwestern Rakhine state began on Aug. 25, when Rohingya insurgents attacked dozens of police posts and an army base, prompting an army counter-offensive that has killed at least 400 people and forced entire villages to flee.

Myanmar says its security forces are fighting a legitimate campaign against "terrorists". The country's leader and Nobel laureate, Aung San Suu Kyi, has come under international pressure for not speaking out against the persecution of roughly 1.1 million Muslim Rohingya in the Buddhist-majority country.

OUT OF SPACE

Makeshift camps in Cox's Bazar, in southeast Bangladesh, have grown so rapidly they have run out of space - even for the tiny tarpaulin and bamboo shacks the Rohingya refugees typically throw together.

"With hundreds of new refugees streaming in every day, Kutupalong and Nayapara camps are at breaking point," Duniya Aslam Khan, a spokeswoman for the United Nations High Commissioner for Refugees (UNHCR), said in a statement.

Imam, the adviser to Hasina, said a lack of space was the biggest concern right now, adding Bangladesh could not continue to house refugees in its schools and madrassas indefinitely.

"We are waiting for Thengar Char to be developed. Once that's done we will shift them," he told Reuters, reflecting a growing sense of hostility towards the Rohingya even in a Muslim-majority country.

"The islands gradually come up because of silting. That's continuing, and that's how Bangladesh has been created. If there are people there, why can't the Rohingya live there?" he said.

Some officials in Bangladesh's interior ministry are concerned that settling the refugees on the island would give them a sense of permanent residency, making it harder to send them back to Myanmar.

Residents of Sandwip, the nearest island to Thengar Char, say the Rohingya are not welcome. Mizanur Rahman, the administrator of Might Bangha village, the closest settlement to Thengar Char, said local residents who have lost their land to erosion should be relocated first, ahead of the Rohingya.

The UNHCR's local office did not respond to an email seeking comment about the relocation plan.

Rohingya camped out in Cox's Bazar said they don't want to move to the island, fearing they could die there during the monsoon season and there won't be any work.

The violence and refugee exodus have ratcheted up tensions between the two neighbours, and Bangladeshi officials said fighter jets were scrambled last week in response to several Myanmar defence helicopters violating its air space.

(Reporting by Krishna N. Das and Ruma Paul in DHAKA; Additional reporting by Serajul Quadir in DHAKA, Simon Lewis in COX'S BAZAR and Tom Miles in GENEVA; Editing by Ian Geoghegan)